FDBusiness.com

Despite the difficult trading environment, Swiss dairy group Emmi achieved sales slightly higher than expected due largely to the strong performance of its latest acquisitions and encouraging international growth. The group net profit margin for 2010 is expected to be slightly over 3%.

Emmi generated net sales of SFr2.68b (Eur2.1b) in 2010, an increase of 2.5% on the previous year. When adjusted for the effects of acquisitions and currencies, organic growth was 1.3%.

Net sales in Switzerland rose by 0.4% to SFr1.95b as strong performances by brands including Emmi Caffe Latte, Kaltbach and Luzerner, coupled with the acquisitions of Fromalp and Nutrifrais offset the fall in prices resulting from lower milk prices and the loss of a major customer in the course of 2009.

Emmi achieved an 8.4% increase in net sales in international markets to SFr732m. This was chiefly due to the encouraging performance of Emmi Roth USA, growing exports of cheese and Emmi Caffe Latte, the collaboration with Venchiaredo and the expansion of the Trentinalatte brand in Italy, and the acquisition of Fromalp. A more positive consumer sentiment in Emmi’s key markets helped to cushion the effects of the strength of the Swiss franc. In local currencies and adjusted for acquisitions, international growth of 9.4% was achieved.

“The results show that we are on track with our strategy. The focus on major key markets and the strengthening of successful brand platforms are showing the expected positive effects,” says Urs Riedener, chief executive of Emmi.

Raw milk prices are expected to remain at the prior-year level in the first half of 2011, while prices for other raw materials (coffee, fruit and cereals) and packaging costs are likely to rise. Emmi expects consumer sentiment to remain stable in its two most important foreign markets, namely Germany and the US. The strength of the Swiss franc will result in further price rises. The effect of these on the customer demand, especially for cheese, remains a risk.